LAWRENCE H. CRANDON, ET AL., PETITIONERS V. UNITED STATES OF
AMERICA
No. 88-938
THE BOEING COMPANY, INC., PETITIONER V. UNITED STATES OF AMERICA
No. 88-931
In The Supreme Court Of The United States
October Term, 1989
On Writs Of Certiorari To The United States Court Of Appeals For
The Fourth Circuit
Supplemental Brief For The United States
The purpose of this supplemental brief is to inform the Court of
several provisions of the Ethics Reform Act of 1989, Pub. L. No.
101-194, 103 Stat. 1716 (Nov. 30, 1989), that have just come to the
attention of this Office.
This case concerns the legality of payments made by petitioner
Boeing Company to the individual petitioners when they left employment
with Boeing to accept positions of responsibility in the Department of
Defense. The court of appeals held that those payments violated 18
U.S.C. 209(a), which prohibits the private supplementation of the
salary of a federal officer or employee, and that the United States is
entitled in this civil action to recover the amount of the payments
from the individual petitioners or from Boeing (to the extent that the
latter recovery is not time-barred). Several sectoins of the Ethnics
Reform Act of 1989 affect Section 209. We are informing the Court of
those provisions so that it will be fully apprised of the current
status of the statute under which this case arises. The relevant
sections of the Act are included as an appendix to this brief.
1. Section 407 of the Ethics Reform Act of 1989 (103 Stat. 1753),
inserts a new Section 216 in Title 18 of the United States Code,
entitled "Penalties and injunctions." Subsection (a) of the new
Section 216 revises the punishment for an offense under 18 U.S.C. 209,
as well as 18 U.S.C. 203, 204, 205, 207, and 208. /1/ Specifically,
it provides (1) that whoever engages in the conduct constituting the
offense shall be subject to misdemenaor sanctions (consisting of
imprisonment for not more than one year and a fine in the amount
prescribed by Title 18 for such a misdemeanor); and (2) that whoever
willfully engages in the conduct constituting the offense shall be
subject to felony sactions (consisting of imprisonment for not more
than five years and the fine prescribed by Title 18 for a felony).
/2/
We explain in our brief on the merits that Section 209(a), as it
existed at the time of the payments at issue in this case, did not
contain any express mens rea element. We further explain that,
contrary to petitioners' contention (Individ. Br. 44-45; Boeing Br.
17-18), the language in Section 209(a) prohibiting the private
supplementation of salary "as compensation for" the recipient's
federal services does not require a showing of specific intent --
i.e., a showing that the payments were made and received with the
purpose of supplementing the recipient's salary. See U.S. Br. 34-45.
Instead, we argue (U.S. Br. 42-43) that Section 209(a) required only a
showing of a "knowing" violation -- i.e., a showing that the payments
were made or received with knowledge that they have the
characteristics that render them supplementations of salary, as
compensation for federal service, within the meaning of that Section.
The recent amendments reinforce the soundness of our submission.
They show that when Congress has intended to impose a heightened mens
rea element under the conflict-of-interest statutes, it has done so in
the ordinary and most straightforward manner -- namely, by expressly
so providing in the statute itself, as it did by including the term
"willfully" in the new Section 216(a)(2). The fact that the new
Section 216(a)(1), by contrast, does not contain any such express mens
rea element makes clear that it does not requrie a showing of specific
intent to establish a misdemeanor violation. The fact that Section
209(a), as in effect when this case arose, likewise did not contain
any such express mens rea provision, and likewise stated only a
misdemeanor offense, reinforces the conclusion that a showing of
specific intent was not required to establish a criminal violation of
Section 209(a). /3/ A fortiori, no showing of specific intent was
required in this civil action in order to require the individual
petitioners to disgorge the payments they received in violation of the
statutory standard of conduct prescribed by Section 209(a).
2. In addition to refining the criminal penalties for violations of
the conflict-of-interest statutes, the new Section 216 added to Title
18 by the Ethics Reform Act of 1989 authorizes the assessment of civil
penalties. Specifically, subsection (b) of Section 216 authorizes the
Attorney General to bring a civil action against any person who
engages in conduct constituting an offense under any of the enumerated
criminal conflict-of-interest statutes, including 18 U.S.C. 209, and
upon proof of such conduct by a preponderance of the evidence, the
person shall be subject to a civil penalty of not more than $50,000 or
the amount of compensation the person received or offered for the
prohibited conduct, whichever is greater. However, subsection (b)
further provides that the imposition of a civil penalty pursuant to
this new statutory authorization "does not preclude any other criminal
or civil statutory, common law, or administrative remedy, which is
available by law to the United States or any other person." /4/ Thus,
the recent amendments confirm the importance of furnishing civil
remedies for violations of Section 209 and other conflict-of-interest
statutes, while expressly preserving "common law" remedies that
already were available to the United States for violation of those
statutes. The instant suits against petitioners to recover payments
made and received in violation of 18 U.S.C. 209 are examples of the
"common law" actions that are now expressly preserved. /6/
3. Finally, Section 302 of the Ethics Reform Act of 1989 (103 Stat.
1745-1746), enacts a new 31 U.S.C. 1352 to expand the situations in
which federal employees may accept reimbursement from outside sources
for travel expenses related to their official duties, notwithstanding
limitations imposed by 18 U.S.C. 209 and other laws. We explain in
our merits brief (U.S. Br. 20-21) that the predecessor to Section 209
-- 18 U.S.C. 1914 (1958) -- outside payment of the travel expenses
incurred by a federal employee in connection with this official duties
and that Congress thereafter carved out a narrow exception to that
rule to permit such reimbursement only by organizations that are
exempt from taxation under 26 U.S.C. 501(c)(3). See 18 U.S.C. 209(d);
5 U.S.C. 4111(a). Subsection (a) of the new 31 U.S.C. 1352 enacted
by the Ethics Reform Act of 1989 provides that "(n)otwithstanding any
other provision of law," which would include 18 U.S.C. 209, the
Administrator of General Services, in consultation with the Director
of the Office of Government Ethics, shall prescribe by regulations the
conditions under which a federal employee may accept reimbursement
from non-federal sources for travel, subsistence and related expenses
of attending a meeting or function in connection with his official
duties. /6/ Subsection (b) makes clear that the new 31 U.S.C. 1352
permits reimbursement from sources other than the tax-exempt
organizations that are authorized by 18 U.S.C. 209(d) and 5 U.S.C.
4111 to make such payments. /7/
Although the travel reimbursement section of the Ethics Reform Act
of 1989 is not directly relevant here, since this case does not
involve travel expenses, we nevertheless bring it to the Court's
attention because we recount in our brief (U.S. Br. 20-21) the past
treatment of travel expenses as part of our general discussion of the
broad construction that has been given to Section 209 by
administrative officials and that has been the premise of amendments
of that Section of Congress. The new 31 U.S.C. 1352(a) continues that
pattern, because it authorizes the acceptance of travel expenses
"(n)otwithstand" other provisions of law, such as Section 209, that
would prohibit such conduct.
CONCLUSION
For the foregoing reasons and the reasons stated in our brief on
the merits, the judgment of the court of appeals should be affirmed.
Respectfully submitted.
KENNETH W. STARR
Solicitor General
FEBRUARY 1990
/1/ Section 406 of the Ethics Reform Act of 1989 (103 Stat. 1753)
makes a conforming amendment to 18 U.S.C. 209(a).
/2/ The maximum fine that may be imposed on an individual is
$100,000 for a Class A misdemeanor (one for which the maximum term of
imprisonment is between six months and one year, see 18 U.S.C.
3559(a)(6)) and $250,000 for a felony; the maximum fine that may be
imposed on an organization is $200,000 for a Class A misdemeanor and
$500,000 for a felony. 18 U.S.C. 3571(b)(3) and (5), (c)(3) and (5).
In the alternative, the court may impose a fine of not more than twice
the gross gain or loss resulting from the offense. 18 U.S.C. 3571(d).
/3/ The legislative history of the 1989 amendments indicates that
the imposition of misdemeanor penalties under the new Section
216(a)(1) requires only a showing of knowledge, and that the
imposition of misdemeanor sanctions under Section 209(a) prior to the
1989 amendments likewise required only a showing of knowledge, as we
have argued. The bifurcation of criminal penalties under the criminal
conflict-of-interest statutes generally into misdemeanor and felony
sanctions originated in the President's proposed ethics legislation
(see H.R. Doc. No. 45, 101st Cong., 1st Sess. 47-48, 59, 63-64, 77
(1989)), although the President did not actually propose that felony
sanctions be instituted for violations of Section 209 (see id. at
65-66, 119). In congressional hearings, Assistant Attorney General
Dennis explained that the misdemeanor provisions in the President's
proposal, which were essentially identical to that eventually enacted
in Section 216(a)(1), authorized sanctions for "knowing" violations,
and that under then-current law, "'knowing' intent is the standard for
all violations." Congressional Ethics Reform: Hearings Before the
House Bipartisan Task Force on Ethics, 101st Cong., 1st Sess. 71-72
(1989) (Hearings).
The same position was taken by the Presidential Commission whose
recommendations formed the basis for the President's proposals to
Congress. See To Serve With Honor: Report of the President's
Commission on Federal Ethics Law Reform (Mar. 9, 1989). The
President's Commission recommended that misdemeanor sanctions should
apply to "knowing" violations, and it described the criminal
conflict-of-interest laws, as they then existed, as follows: "The
various offenses are established if the person acted 'knowingly,' that
is, if he merely intended to act as he did. There is no requirement,
as with some criminal statutes(,) that the individual act willfully,
that is, with a bad purpose or with a deliberate intent to violate the
law." Id. at 104.
The report issued by the House Bipartisan Task Force on Ethics
after the hearings explained that the bill it proposed included
various statutory changes from the President's ethics package,
including the conflict-of-interest provisions. See Bipartisan Task
Force on Ethics, 101st Cong., 1st Sess., Report on H.R. 3660, at 4
(Comm. Print 1989) (Ethics Report). The report's discussion of each
of the various criminal conflict-of-interest statutes affected by the
amendments stated that the bill authorized misdemeanor and civil
penalties (see pages 5-7, infra), "while retaining and strengthening
felony sanctions for willful violations." Ethics Report at 56 (Section
203), 56 (Section 204), 57 (Section 209). The report is inaccurate in
stating that felony sanctions were "retained" for Section 209, since
Section 209 previously imposed only misdemeanor sanctions and since
the Task Force's bill in fact did not contain new felony sanctions
applicable to violations of Section 209. See H.R. 3660, 101st Cong.,
1st Sess. Section 401(f) and (g) (1989). As finally enacted, however,
the felony sanctions now contained in the new Section 216(a)(2) were
made applicable to Section 209 as well. For the other
conflict-of-interest statutes that previously provided felony
sanctions, the effect of the 1989 amendments was to increase the
showing required for a felony conviction from a "knowing" to a
"willful" violation.
Insofar as we have been able to ascertain, the immediate
legislative history of the 1989 amendments sheds no further light on
the mens rea issue. However, in 1988, Congress passed a bill (H.R.
5043, 100th Cong., 2d Sess.) -- which failed to become law under the
"Pocket Veto" Clause of the Constitution, Art. I, Section 7, Cl. 2
(see 24 Weekly Comp. Pres. Doc. 1563 (Nov. 23, 1988)) -- that would
have made similar changes in the criminal sanctions for violations of
the post-employment prohibitions in 18 U.S.C. 207. Although limited
to 18 U.S.C. 207, the misdemeanor provision in that bill was otherwise
identical to what was enacted as the new 18 U.S.C. 216(a)(1). See
H.R. Rep. No. 1068, 100th Cong., 2d Sess. 41 (1988) (proposing new
Section 207(g)(1)). Although that provision, like the new 18 U.S.C.
216(a)(1) (and 18 U.S.C. 209(a), did not contain any express mens rea
element, the House Report explained it as applying to "knowing"
violations, and the report explained that an act would be knowing "if
it is done voluntarily and intentionally and not because of a mistake,
inadvertence, or accident." H.R. Rep. No. 1068, supra, at 21. There
is no doubt that petitioners' conduct was "knowing" under this
standard.
/4/ The civil penalties provision was also derived from the
President's proposal. See H.R. Doc. No. 45, supra, at 48, 59-60, 64,
77. During the congressional hearings in September 1989 on pending
ethics legislation, Assistant Attorney General Dennis explained in
support of this proposal that "(c)ivil penalties are a particularly
useful supplement to criminal fine authority because the standard of
proof in a civil action, preponderance of the evidence, is easier to
meet than the standard in a criminal case, proving guilty beyond a
reasonable doubt." Hearings, at 72. See also id. at 68 (President's
proposal would amend the criminal conflict-of-interest statutes to
"provid(e) a more diverse arsenal of enforcement actions").
The Presidential Commission likewise had recommended enactment of
the provision for imposition of civil penalties, both because of the
lower standard of proof and because "criminal conviction carries with
it a stronger stigma and, in the case of a felony conviction,
collateral consequences that may be unjustified in some cases as when
the defendant violated the statute through understandable
inadvertence." To Serve Honor, supra, at 105. Similar considerations
apply to the civil remedy sustained by the court of appeals in this
case. The requirement that the individual petitioners disgorge the
payments they should not have done. Moreover, although petitioners'
conduct was by no means inadvertent, to the extent petitioners contend
they did not realize that the payments would violate Section 209(a) or
that the rule of lenity or due process principles should lead to a
narrow construction of a criminal statute (if we assume, arguendo,
that Section 209(a) is ambiguous in its application here, despite its
all-inclusive text, legislative history, and consistent administrative
interpretation, see U.S. Br. 24-33), the concerns underlying those
contentions (see United States v. Kozminski, 108 S. Ct. 2751, 2764
(1988)) are largely eliminated where, as here, the government seeks
relief in a civil action.
/5/ Subsection (c) of the new 18 U.S.C. 216 authorizes the Attorney
General to bring an action for injunctive relief to restrain
violations of Section 209(a) and other criminal conflict-of-interest
statutes.
/6/ Any reimbursement is to be credited against the agency's
appropriation. 31 U.S.C. 1352(a).
/7/ The regulations implementing 31 U.S.C. 1352(a) have not yet
been issued.
APPENDIX